UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20552

                                   ----------

                                    FORM 10-K

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2004
                          ------------------
                                       OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ________ to ________

                        Commission file number 000-22817

                         HARBOR FLORIDA BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                          65-0813766
---------------------------                         -------------------------
    (State or other jurisdiction                         (I.R.S. employer
  of incorporation or organization)                     identification no.)

                              100 S. SECOND STREET
                              FORT PIERCE, FL 34950
                    (Address of principal executive offices)
                                   (ZIP code)

Registrant's telephone number, including area code     (772) 461-2414
                                                    --------------------------

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock (par value $0.10)
                    ------------------------------------------
                                (Title of class)

                    -------------------------------------------
                                (Title of class)


<PAGE>



         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes__X__ No____


         [ ] Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.

         Indicate by check whether the Registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes __X___ No ____

         The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant computed by reference to the average
bid and asked price of the common stock as of December 3, 2004 ($36.00) was
$856,713,384.

         The number of shares of common stock outstanding on December 3, 2004
was 23,797,594.

         Documents incorporated by reference:

                  Parts II and IV of Form 10-K

                           Annual Report to Shareholders for the fiscal year
                           ended September 30, 2004. With the exception of those
                           portions which are incorporated by reference in this
                           Form 10-K Annual Report, the 2004 Annual Report to
                           Shareholders is not deemed to be filed as part of
                           this report.

                  Part III of Form 10-K

                           Proxy Statement for the 2004 Annual Meeting of
                           Shareholders.


                                        2
<PAGE>



                                                  TABLE OF CONTENTS



    Item                                                                  Page
     No.                                                                   No.
     ---                                                                   ---

               Part I

      1        Business                                                       4

      2        Properties                                                    21

      3        Legal Proceedings                                             25

      4        Submission of Matters to a Vote of Security Holders           25

               Part II

      5        Market for Registrant's Common Equity, Related Stockholder
               Matters and Issuer Purchases of Equity Securities             25


      6        Selected Financial Data                                       26

      7        Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                     26

     7A        Quantitative and Qualitative Disclosures about Market Risk    26

      8        Financial Statements and Supplementary Data                   26

      9        Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                           26

     9A        Controls and Procedures                                       26

               Part III

     10        Directors and Executive Officers of the Registrant            27

     11        Executive Compensation                                        27

     12        Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters                    27


     13        Certain Relationships and Related Transactions                28

     14        Principal Accounting Fees and Services                        28

               Part IV

     15        Exhibits and Financial Statement Schedules                    29

               Signatures                                                    31


                                        3
<PAGE>



                                     PART I

Item 1.  Business

General

       Harbor Florida Bancshares, Inc., (the "Company" or "Bancshares"), is a
Delaware corporation organized in 1998 and is the holding company for Harbor
Federal Savings Bank (the "Bank"), a federally chartered savings bank. The Bank
was founded in 1934 as a federally chartered savings institution. The Company
owns 100% of the Bank's common stock. Currently, the Company engages in no other
significant activities beyond its ownership of the Bank's common stock.
Consequently, its net income is derived from the Bank. The Bank provides a wide
range of banking and related insurance services but is principally engaged in
the business of attracting deposits predominately from the communities it serves
and using these and other funds to originate primarily one-to-four family first
mortgage loans. Harbor Insurance Agency, Inc., a wholly owned subsidiary of the
Bank, also provides a full range of insurance products.

       Prior to March 18, 1998, the Company's predecessor entity, Harbor Florida
Bancorp, Inc. ("Bancorp"), was owned approximately 53.37% by Harbor Financial
M.H.C. ("Mutual Holding Company") and 46.63% by public shareholders. On March
18, 1998, pursuant to a plan of conversion and reorganization, and after a
series of transactions: (1) Bancshares was formed and became the surviving
corporate entity, (2) Bancshares sold the ownership interest in Bancorp
previously held by the Mutual Holding Company to the public in a subscription
offering (the "Offering") (16,586,752 common shares at $10.00 resulting in net
cash proceeds (after costs and funding the ESOP) of approximately $150 million),
(3) previous public shareholders of Bancorp had their shares exchanged into
14,112,400 common shares of Bancshares (exchange ratio of 6.0094 to 1) (the
"Exchange"), and (4) the Mutual Holding Company ceased to exist. The total
number of shares of common stock outstanding following the Offering and Exchange
was 30,699,152. The reorganization was accounted for in a manner similar to a
pooling of interests and did not result in any significant accounting
adjustments.

Market Area

         The Company serves communities in seven growing and diverse Florida
counties. Its headquarters are in Fort Pierce, Florida, located on the eastern
coast of Florida between Stuart and Daytona Beach. In addition to its
headquarters, it has eighteen branch offices and four insurance agency offices
in St. Lucie, Indian River and Martin counties, located on Florida's "Treasure
Coast." This area is characterized by both a large retirement and vacation home
population and a significant agricultural economy, primarily citrus crops. The
Company has eight branch offices, and one insurance agency office located in
Brevard County, which encompasses the "Space Coast" of the state. Brevard County
has an industrial base fueled primarily by companies related to NASA and the
John F. Kennedy Space Center. Prominent electronics concerns such as Harris
Corporation are also major employers in this area. The Company also has one
branch office in Okeechobee County, a rural, agricultural area, seven branch
offices in Volusia County, where tourism and a large retirement population
predominate, and one branch office in Lake County, opened this past summer.

The Company's results of operations are affected by the general and economic
conditions of the counties it serves. Management believes that the area's rapid
population growth and expanding real estate market will support continued
earning's growth.

During August and September 2004, several hurricanes passed directly over the
Company's market area within weeks of each other, resulting in property damage
throughout the region. The Company provided services to all of its markets on
the first business day after each storm. During the weeks following, Harbor
Insurance Agency handled thousands of insurance claims. The Company noted an
increase in past due loans, particularly in the residential mortgage and
consumer loan portfolios. Loan and deposit programs were implemented to assist
customers with their recovery and rebuilding efforts. Certain customers were
provided with short-term loan principal and/or interest deferments and/or
extended credit facilities. None of these programs had or is expected to have
any significant impact on the financial position, results of operations and cash
flows of the Company. The storm-related damages to the Company's own buildings,
which are predominately covered by insurance, are currently being repaired and
rebuilt.


                                        4
<PAGE>
Management is uncertain of the long-range effects on the economy, but believes
that the area continues to represent an attractive market with strong growth
potential. In the short-term, the changed environment could present challenges
to the operations of the Company as a result of lower levels of originations,
loan sales, and fee income.


Lending Activities

         General. The Company's principal activity has historically been, and
will continue to be for the foreseeable future, the origination of one-to-four
family residential mortgage loans. The Company sells conforming loans, primarily
to the Federal National Mortgage Association (FNMA), and has, on rare occasions,
purchased whole loans and loan participations, but it primarily focuses on the
origination of loans and retains them in its portfolio for investment. See
"Lending Activities, One-to-Four Family Permanent Residential Mortgage Loans"
below. The Company also originates one-to-four family residential construction
and consumer loans, and consumer installment, commercial real estate and
commercial business loans. Substantially all of the Company's mortgage loans are
secured by property in its market area and substantially all of its other loans
are made to borrowers in its market area.

         The Company offers both fixed-rate and adjustable rate mortgage (ARM)
loans. The Company has sought to increase its origination of ARM loans to reduce
its interest rate risk. The Company's ability to originate ARM loans has been
limited due to borrower preference for fixed-rate loans in a low interest rate
environment. Recently, however, the rising interest rate environment has
increased borrower preference for ARM loans.



                                        5
<PAGE>



         Loan and Mortgage-Backed Securities Portfolio Composition. The
following table sets forth a summary of the composition of the Company's loan
and mortgage-backed securities portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
                                                                        At September 30,
                         ----------------------------------------------------------------------------------------------------------
                                   2004                 2003                  2002                2001                  2000
                                   ----                 ----                  ----                ----                  ----

                                      Percent               Percent               Percent            Percent                Percent
                                        of                     of                   of                 of                     of
                            Amount     Total      Amount     Total      Amount     Total     Amount   Total       Amount     Total
                            ------     -----     -------    ------      ------    -------    ------   ------      ------    -------

                                                                         (Dollars in thousands)
<S>                       <C>          <C>     <C>          <C>      <C>          <C>     <C>         <C>       <C>         <C>
Mortgage Loans
Construction 1-4 family   $  298,585   14.16%  $  190,315    10.81%  $  142,181    8.59%  $  119,648    7.95%   $  106,063    7.88%
Permanent 1-4 family       1,069,514   50.71    1,014,405    57.62    1,072,175   64.74    1,016,248   67.53       899,229   66.81
Multifamily                   27,276    1.29       19,754     1.13       14,995    0.90       21,314    1.42        20,474    1.52
Nonresidential               235,083   11.15      181,752    10.32      153,635    9.28      129,875    8.63       120,067    8.92
Land                         198,937    9.43      126,950     7.21       82,339    4.97       51,196    3.40        54,731    4.07
                           ---------   -----    ---------    -----    ---------  ------    ---------  ------     ---------  ------
    Total Mortgage
    Loans                  1,829,395   86.74    1,533,176    87.09    1,465,325   88.48    1,338,281   88.93     1,200,564   89.20
                           ---------   -----    ---------    -----    ---------   -----    ---------  ------     ---------  ------

Other Loans


Commercial                    72,276    3.43       56,268     3.20       34,172    2.06       31,945    2.12        28,606    2.13

Consumer:
    Home equity lines
       of credit              59,838    2.84       48,149     2.73       41,426    2.51       25,198    1.67        16,782    1.25
    Other consumer
        secured by
        real estate          103,621    4.91       76,648     4.35       69,551    4.20       67,144    4.46        60,961    4.53
    Other Consumer            43,945    2.08       46,264     2.63       45,550    2.75       42,312    2.82        38,992    2.89
                           ---------   -----    ---------   ------    ---------  ------    ---------  ------     ---------  ------
    Total Other Loans        279,680   13.26      227,329    12.91      190,699   11.52      166,599   11.07       145,341   10.80
                           ---------   -----    ---------   ------    ---------  ------    ---------  ------     ---------  ------


Total Loans Receivable     2,109,075  100.00%   1,760,505   100.00%   1,656,024   100.00%  1,504,880  100.00%    1,345,905  100.00%
                           ---------  ======    ---------   ======    ---------   ======   ---------  ======     ---------  ======
Less:
Loans in process             190,453              124,427                93,999               84,777                77,074
Deferred loan fees and
    discounts                  9,651                8,494                 6,180                4,813                 4,433
Allowance for loan
    losses                    17,802               16,199                14,377               13,417                12,729
                           ---------            ---------             ---------            ---------             ---------
    Subtotal                 217,906              149,120               114,556              103,007                94,236
                           ---------            ---------             ---------            ---------             ---------

Total Loans Receivable,
     Net                   1,891,169            1,611,385             1,541,468            1,401,873             1,251,669
Loans Held for Sale            2,438                2,648                 8,263                5,373                 2,548

Mortgage-backed
     Securities              443,060              308,075               181,269              153,714               165,059
                           ---------            ---------             ---------            ---------             ---------
Total                     $2,336,667           $1,922,108            $1,731,000           $1,560,960            $1,419,276
                           =========            =========             =========            =========             =========
</TABLE>

                                        6

<PAGE>


       The following table shows the maturity or period to repricing of the
Company's loan and mortgage-backed securities portfolios at September 30, 2004.
Loans that have adjustable rates are shown as being due in the period in which
the interest rates are next subject to change. The table does not include
prepayments or scheduled principal amortization. Prepayments and scheduled
principal amortization on loans totaled $605.9 million, $658.5 million and
$446.9 million for fiscal years 2004, 2003 and 2002, respectively. Loans having
no stated maturity and no schedule of repayments (including delinquent loans),
and demand loans are reported as due within one year.
<TABLE>
<CAPTION>

                                                  One         Three          Five
                                   Within       through      through        through      Ten through    Beyond twenty
                                  one year    three years  five years      ten years     twenty years       years        Total
                                  --------    -----------  ----------      ---------     ------------       -----        -----

                                                                       (In thousands)
<S>                              <C>           <C>          <C>            <C>            <C>             <C>         <C>
Mortgage loans:
  1-4 family                     $101,269      $118,924     $105,495       $ 77,688       $306,825        $471,113    $1,181,314
  Other                           161,226        58,092       67,856         80,629         87,800           1,514       457,117
Other loans:
  Consumer                         77,269        16,427       35,043         26,327         51,785             470       207,321
  Commercial                       29,532         6,934       18,588          4,159         12,932             100        72,245
Nonperforming loans (1)             3,063           ---          ---            ---            ---             ---         3,063
Mortgage-backed securities            599          911        39,052        374,365         27,471             662       443,060
                                  -------       -------      -------        -------        -------         -------     ---------
    Sub-total                    $372,958      $201,288     $266,034       $563,168       $486,813        $473,859    $2,364,120
                                  =======       =======      =======        =======        =======         =======
Deferred loan fees and
    discounts                                                                                                             (9,651)
Allowance for loan losses                                                                                                (17,802)
                                                                                                                       ---------
Total (2)(3)                                                                                                          $2,336,667
                                                                                                                       =========
</TABLE>


  (1) All nonperforming loans are reported as due within one year regardless of
      the actual maturity term.
  (2) Amounts reported do not include principal repayment or prepayment
      assumptions.
  (3) Amounts include loans held for sale of $2.4 million at September 30, 2004.

                                 --------------

       The following table sets forth the amount of the Company's portfolio of
fixed-rate and adjustable-rate loans at September 30, 2004 that are due or
repricing after September 30, 2005.
<TABLE>
<CAPTION>
                                                          Adjustable
                                        Fixed rate           rate                Total
                                        ----------           ----                -----
                                                        (In thousands)
<S>                                     <C>               <C>                 <C>
        Mortgage loans:
          1-4 family                    $  851,645        $ 228,400           $1,080,045
          Other                            153,995          141,896              295,891
        Other loans:
          Consumer                         128,487            1,565              130,052
          Commercial                        41,433            1,280               42,713
                                            ------         --------            ---------
        Total loans                      1,175,560          373,141            1,548,701
        Mortgage-backed securities         442,461              ---              442,461
                                         ---------         --------            ---------
        Total                           $1,618,021        $ 373,141           $1,991,162
                                         =========         ========            =========
</TABLE>

                                        7

<PAGE>
       One-to-Four Family Permanent Residential Mortgage Loans. The Company's
primary lending activities focus on the origination of one-to-four family
residential mortgage loans. The Company generally does not originate one-to-four
family residential loans on properties outside of its market area. At September
30, 2004, $1.1 billion or 50.7% of the Company's total loan portfolio and 40.7%
of total assets consisted of one-to-four family loans.

       The Company's fixed rate loans generally are originated and underwritten
according to standards that permit sales in the secondary market. The decision
to sell depends on a number of factors including the yield and the term of the
loan, market conditions, and the Company's current portfolio position. In
addition, the Company sells loans under the single family Mortgage Revenue Bond
Programs through local County Housing Finance Authorities. The servicing on
these loans is released. Servicing is retained for all other sold loans.

       The Company currently offers one-to-four family residential mortgage
loans with fixed, adjustable or a combination of fixed/adjustable interest
rates. Adjustable rate loans enable the Company to create a loan portfolio more
sensitive to fluctuating interest rates. Originations of fixed rate mortgage
loans versus ARM loans are monitored on an ongoing basis and are affected
significantly by the level of market interest rates, customer preference, the
Company's interest rate gap position, and loan products offered by the Company's
competitors. In a low interest rate environment, borrowers typically prefer
fixed rate loans to ARM loans. Accordingly, even if management's strategy is to
emphasize ARM loans, market conditions may result in greater demand for fixed
rate mortgage loans.

       The Company generates residential mortgage loan activity through local
advertising, its existing customers and referrals from local real estate brokers
and home builders. Residential loans are originated by Company loan officers,
none of whom have underwriting authority. Independent loan brokers are not used.
All loans are generated on a retail basis.

       Residential loans are authorized and approved under central authority by
experienced underwriters. Underwriters have individual authority to approve
loans up to the maximum amount of $500,000. Residential mortgage loans in excess
of this amount are approved by management individually up to $1,000,000 or by
committee if above $1,000,000. The Company's underwriting standards are intended
to ensure that borrowers are sufficiently credit worthy, and all of the
Company's lending is subject to written underwriting policies and guidelines
approved by the Company's Board of Directors. Detailed loan applications are
designed to determine the borrower's ability to repay the loan and certain
information solicited in these applications is verified through the use of
credit reports, financial statements and other confirmations. The Company
obtains an appraisal of substantially all of the proposed security property in
connection with residential mortgage loans. Additionally, title insurance is
required for all residential mortgage loans above $50,000.

       The types, amounts, terms of and security for conventional loans (those
not insured or guaranteed by the U.S. government or agencies thereof, or state
housing agencies) originated by the Company are predominately prescribed by
federal regulation. The Office of Thrift Supervision ("OTS") regulations limit
the amount which the Company can lend up to specified percentages of the value
of the real property securing the loan, as determined by an appraisal at the
time the loan is originated (referred to as "loan-to-value ratios"). The Company
makes one-to-four family home loans and other residential real estate loans with
loan-to-value ratios generally of up to 80% of the appraised value of the
security property. In certain circumstances loan-to-value ratios exceed 80%, in
which case private mortgage insurance is generally required. A substantial part
of the Company's loan originations are made to borrowers to finance second homes
for vacation use or for use as a rental property. Such loans are generally
considered to have a higher credit risk than loans to finance a primary
residence.

       One-to-Four Family Residential Construction Loans. A part of the
Company's loan originations are to finance the construction of one-to-four
family homes in the Company's market area. At September 30, 2004, the Company
had $298.6 million in such loans, representing 14.2% of total loans. It is the
Company's policy to disburse loan proceeds as construction progresses and as
warranted by inspections.

       A portion of these loans is made directly to the individual who will
ultimately own and occupy the home. Of these, the vast majority are structured
at origination to guarantee the permanent financing to the Company as well. In
recent years, the origination of these construction loans to individuals is
second in volume only to the origination of traditional loans to finance the
purchase or refinance of an existing home. However, the significance of this
type of lending to the Company is not evident from the amount of these loans in
its portfolio at any given time because these construction loans to individuals
often "roll" into permanent financing following the completion of construction.



                                        8
<PAGE>

       Consumer Loans. The Company originates consumer loans as an essential
element in its retail-oriented strategy. Secured consumer loans include
automobile, manufactured housing, boat and truck loans, home equity and home
improvement loans as well as loans secured by the borrower's deposit accounts
with the Company. The loans for manufactured housing are generally originated
within higher quality, retirement lifestyle communities spread throughout the
seven county market area. Such communities generally feature permanent amenities
such as full service clubhouse facilities, swimming pools, and in a number of
cases, golf courses. These loans are subject to the normal underwriting
standards of the Company. Loans are made on either a fixed-rate or
adjustable-rate basis, with terms generally up to 15 years. A limited amount of
unsecured consumer loans are also originated. At September 30, 2004,
consumer-oriented loans accounted for $207.4 million or 9.8% of the Company's
total loan portfolio.

       Non-Residential and Land Mortgage Loans. Non-residential mortgage loans
are offered on properties within the Company's primary market area using both
fixed or adjustable rate programs. The Company originated $96.0 million, $83.5
million, and $46.7 million of non-residential mortgage loans in 2004, 2003 and
2002, respectively. At September 30, 2004, nonresidential loans constituted
$235.1 million or 11.2% of the Company's total loan portfolio. Origination of
these loans plays a secondary role to the origination of residential mortgage
loans.

       Loans secured by non-residential real estate generally carry larger
balances and involve a greater degree of risk than one-to-four family
residential mortgage loans. This increased risk is a result of several factors,
including the concentration of principal in a limited number of loans and
borrowers, the effects of general economic conditions on income-producing
properties, and the increased difficulty of evaluating and monitoring these
loans. Furthermore, the repayment of loans secured by non-residential property
is typically dependent upon the successful operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired. See "Business -- Delinquent, Nonperforming and
Classified Assets."

       The Company originates land loans to residential builders, developers and
individuals for future residential construction. The majority of these loans are
secured by fully developed residential lots. Lot loans are offered with either a
fixed or adjustable interest rate. Loan terms vary with a maximum term of up to
15 years for individual borrowers. At September 30, 2004, land loans accounted
for $198.9 million or 9.4% of the Company's total loan portfolio.

       Other Loans. The balance of the Company's lending consists of
multi-family mortgage and commercial loans. At September 30, 2004, these loans
represented $27.3 million or 1.3% and $72.3 million or 3.4%, respectively, of
the Company's total loan portfolio. The multi-family mortgage loans are secured
primarily by apartment complexes. These loans are subject to the same lending
limits as apply to the Company's commercial real estate lending. The commercial
loans primarily represent equipment and other business loans to professionals
such as physicians and attorneys. These loans are an integral part of the
Company's strategy of seeking synergy between its various deposit and loan
products and as a service to existing customers.

Origination and Sale of Loans

       Historically, the Company has sold conforming, newly originated or
refinanced 15 and 30-year fixed rate mortgage loans, primarily to the FNMA and
the Federal Home Loan Mortgage Corporation (FHLMC), with servicing retained. For
the year ending September 30, 2004, the Company sold $89.2 million of conforming
newly originated or refinanced 15and 30-year fixed rate loans to FNMA and FHLMC.

       In addition, the Company sells loans under the single family Mortgage
Revenue Bond Programs through local County Housing Finance Authorities. The
servicing on these loans is released, which means the Company does not retain
any administrative or collection responsibilities in connection with the loans.
For the year ending September 30, 2004, the Company sold approximately $6.2
million in fixed rate loans to local County Housing Finance Authorities.

       The purpose of selling a portion of fixed rate loans from current
production is to reduce the Company's interest rate risk by limiting the growth
of longer term fixed rate loans in the portfolio and to generate service fee
income over time. Historically, the Company has not purchased significant
amounts of loans.

       The Company generally retains servicing when it sells loans and receives
fees for servicing activities on such loans. These servicing activities include,
but are not limited to, collecting principal, interest and escrow payments from
borrowers; paying taxes and insurance from escrowed funds; monitoring
delinquencies; and accounting for and remitting

                                        9
<PAGE>

principal and interest payments. To the extent that the servicing fees exceed or
do not provide  adequate  compensation  for the services  provided,  the Company
records a  servicing  asset or  liability  for the fair  value of the  servicing
retained.  Currently,  the  servicing  fees  retained  by the  Company  are just
adequate to  compensate  the Company for its servicing  responsibilities.  As of
September  30,  2004 and 2003,  no  servicing  assets  and/or  liabilities  were
recognized.

       The following table shows total loan origination activity including
mortgage-backed securities, during the periods indicated.
<TABLE>
<CAPTION>
                                                                    Years ended September 30,
                                                                    -------------------------
                                                           2004                 2003              2002
                                                           ----                 ----              ----

                                                                         (In thousands)
<S>                                                     <C>                  <C>               <C>
Mortgage loans (gross):
  At beginning of year (1)                              $1,535,845           $1,473,615        $1,343,699
  Mortgage loans originated:
    Construction 1-4 Family                                375,642              271,796           212,956
    Permanent 1-4 Family                                   319,231              395,210           310,545
    Multi-family                                            33,181               15,787            10,122
    Nonresidential                                          95,969               83,518            46,748
    Land                                                   170,605              100,581            46,676
                                                         ---------            ---------         ---------
  Total mortgage loans originated (2)                      994,628              866,892           627,047
  Mortgage loans sold                                      (95,403)            (144,493)         (104,177)
  Principal repayments                                    (602,986)            (659,890)         (392,039)
  Mortgage loans transferred to real estate owned             (242)                (279)             (915)
                                                         ---------            ---------         ---------
  At end of year (1)                                    $1,831,842           $1,535,845        $1,473,615
                                                         =========            =========         =========

Other loans (gross):
  At beginning of year                                  $  227,329           $  190,699        $  166,599
  Other loans originated                                   211,772              121,821           109,068
  Principal repayments                                    (159,421)             (85,191)          (84,968)
                                                         ---------            ---------         ---------
  At end of year                                        $  279,680           $  227,329        $  190,699
                                                         =========            =========         =========

Mortgage-backed securities:
  At beginning of year                                  $  308,075           $  181,269        $  153,714
  Mortgage-backed securities purchased                     234,691              232,822            84,143
  Mortgage-backed securities sold                           (4,991)                 ---               ---
  Principal repayments                                     (94,715)            (106,016)          (56,588)
                                                         ---------            ---------         ---------
  At end of year                                        $  443,060           $  308,075        $  181,269
                                                         =========            =========         =========
</TABLE>

       (1) Includes loans held for sale of $2.4 million (gross).
       (2) Loans originated represent loans closed, however all loans may not be
           fully disbursed at time of closing.

                                -----------------

Mortgage-backed Securities

       A substantial part of the Company's business involves investments in
mortgage-backed securities issued or guaranteed by an agency of the United
States government. Historically, the Company's mortgage-backed securities
portfolio has consisted primarily of pass-through mortgage participation
certificates issued by FHLMC and FNMA. These pass-through certificates represent
a participation interest in a pool of single-family mortgages, the principal and
interest payments of which are passed from the loans' originators, through the
FHLMC and FNMA which pool and package the participation interests into the form
of securities, to investors such as the Company. The FHLMC and FNMA guarantee
the payment of principal and interest. The underlying pool of mortgages can
consist of either fixed-rate or adjustable-rate loans. At September 30, 2004,
the Company's portfolio of mortgage-backed securities consisted entirely of
FHLMC and FNMA participation certificates. Of the $443.1 million in
mortgage-backed securities held at that date, all represented fixed-rate
securities with anticipated maturity dates from one month to 29 years.


                                       10
<PAGE>

       The Company's fixed-rate mortgage-backed securities consist of both
long-term and balloon securities. The long-term securities have original
maturity terms of ten, fifteen and thirty years. The balloon securities have
principal and interest amortization based on a thirty-year maturity schedule
with final principal balloon payments due in five, seven or ten years from the
date of the security. Balloon mortgage-backed securities are held in the
portfolio as a means of reducing the average life of the fixed-rate portfolio. A
shorter average portfolio life will help reduce the interest rate risk
associated with these investments. As of September 30, 2004, long-term,
fixed-rate mortgage-backed securities amounted to $45.2 million, which included
$44.5 million in fifteen-year and $662,000 in thirty-year securities. In
addition, five-year, seven-year, and ten-year balloon mortgage-backed securities
amounted to $39.1 million, $356.9 million and $1.9 million, respectively.

       During periods of declining interest rates, fixed-rate mortgage-backed
securities may have accelerated principal reductions due to increased
refinancing activity on the underlying mortgage loans. The reinvestment of the
accelerated principal reductions at lower prevailing rates could result in lower
overall portfolio yields and income. During periods of rising interest rates,
fixed-rate mortgage-backed securities will tend to depreciate in value. Thus,
total returns on fixed-rate mortgage-backed securities are expected to decline
as market interest rates rise.

       If the Company purchases mortgage-backed securities at a premium,
accelerated principal repayments may result in some loss of principal investment
to the extent of the premium paid. Conversely, if mortgage-backed securities are
purchased at a discount, accelerated principal reductions will increase current
and total returns.

Delinquent, Nonperforming and Classified Assets

       Delinquent  Loans.  All delinquent loan results are reviewed monthly by
the Company's Board of Directors.  The Company believes it has an effective
process and policy for dealing with delinquent loans.

       Residential delinquencies are handled by the Loan Collections Department.
This department begins collection efforts on residential loans when a loan
appears on the 15-day delinquent list. Borrowers are sent a notice to accelerate
the debt when the debt is 45 days delinquent. If the delinquent account has not
been corrected, foreclosure proceedings are begun generally at the 75th day of
delinquency. At September 30, 2004, residential loans delinquent 90 days and
longer represented .08% of the total residential loan portfolio.

       Commercial delinquent accounts are processed by the Special Asset and
Lending Departments. For commercial accounts classified as Substandard, as
defined below, or worse, the Special Asset Department has jurisdiction over the
collection efforts. As with residential delinquent loans, commercial loans are
placed on a non-accrual basis when they are 90 days past due or when the
collection of the interest or full principal is considered doubtful.

       If a collection action is instituted on a consumer or commercial loan,
the Company, in compliance with the loan documents and the law, may repossess
and sell the collateral security for the loan through private sales or through
judicially ordered sales when necessary. Should the sale result in a deficiency
owing to the Company, the borrowers generally are pursued where such action is
deemed appropriate, including recourse based on personal loan guarantees by the
borrower's principals.

                                       11
<PAGE>

       The following table shows the Company's loans delinquent 90 days or more
and loan delinquencies as a percent of total loans at the dates indicated.

<TABLE>
<CAPTION>

                                                                September30,
                                     --------------------------------------------------------------------

                                            2004                    2003                      2002
                                            -----                   ----                      ----
                                                            (Dollars in thousands)

                                     Number    Amount           Number  Amount            Number   Amount
<S>                                <C>       <C>              <C>     <C>                 <C>     <C>
Mortgage loans:
  Permanent 1-4 family                 17    $   935              19  $ 1,134                 20  $ 1,170
  Other mortgage                        3      2,014               1      475                  1       67
                                   ------     ------          ------   ------             ------   ------
  Total mortgage loans                 20      2,949              20    1,609                 21    1,237
Other loans                             7         83              11      397                 13      423
                                   ------     ------          ------   ------             ------   ------
Total loans                            27    $ 3,032              31  $ 2,006                 34  $ 1,660
                                   ======     ======          ======   ======             ======   ======
Delinquent loans to total loans                  .16%                     .14%                        .11%
</TABLE>
                                ----------------

       As of September 30, 2004, 2003 and 2002, $0, $209,000, and $0,
respectively, of loans were on nonaccrual status which were less than 90 days
past due.

       Nonperforming Assets. The Company also places emphasis on maintaining
asset quality. The Company's nonperforming assets as a percentage of total
assets decreased slightly from .13% at September 30, 2003 to .12% at September
30, 2004.

       Loans 90 days past due are generally placed on non-accrual status. The
Company ceases to accrue interest on a loan once it is placed on non-accrual
status, and interest accrued but unpaid at that time is charged against interest
income. Additionally, any loan where it appears evident that the collection of
interest is in doubt is also placed on a non-accrual status. The Company
evaluates impaired loans (primarily consisting of classified loans) based on (a)
the present value of the expected future cash flows of the impaired loan
discounted at the loan's original effective interest rate, (b) the observable
market price of the impaired loan, or (c) the fair value of the collateral of a
collateral dependent loan. To the extent that an impaired loan's value is less
than the loan's recorded investment, a specific allowance is recorded.

       The investment in impaired loans (primarily consisting of classified
loans), other than those evaluated collectively for impairment, at September 30,
2004, 2003 and 2002 was $4,627,000, $6,259,000 and $8,941,000, respectively. The
average recorded investment in impaired loans during the years ended September
30, 2004, 2003 and 2002 was approximately $5,568,000, $8,011,000 and $9,469,000,
respectively. There were no commitments to lend additional funds to these
borrowers. No specific allowances relating to these loans were recorded at
September 30, 2004 and 2003. Interest income on impaired loans of approximately
$381,000, $584,000 and $743,000 was recognized in the years ended September 30,
2004, 2003 and 2002, respectively.

       If a foreclosure action is instituted on a real estate-secured loan and
the loan is not reinstated, paid in full, refinanced, or deeded back to the
Company, the property is sold at a foreclosure sale at which the Company may be
the buyer. Thereafter, such acquired property is listed in the Company's real
estate owned (REO) account or that of a subsidiary, until the property is sold.
Upon acquisition, the Company records all REO at fair value less cost to sell at
the date of foreclosure, establishing a new cost basis. The fair value is based
upon the most recent appraisal and management's evaluation. If the fair value of
the asset is less than the loan balance outstanding, the difference is charged
against the Company's loan loss allowance prior to transferring the asset to
REO. Should the foreclosure sale not produce sufficient proceeds to pay the loan
balance and court costs, the Company's attorneys, where appropriate, may pursue
the collection of a deficiency judgment against the responsible borrower.

       It is the Company's policy to try to liquidate its holdings in REO on a
timely basis while considering both market conditions and the cost of carrying
REO properties. The Company also finances the sales of REO properties, subject
to certain initial investment criteria by the borrower. Administration of REO
property is handled by the Special Assets Department, which is responsible for
the sale of all residential and commercial properties. In those instances where
the property may be located outside the Company's market area or where the
property, due to its nature, requires certain expertise (i.e., hotels, apartment
complexes), outside management firms may be utilized.


                                       12
<PAGE>

       At the dates indicated, nonperforming assets in the Company's portfolio
were as follows:
<TABLE>
<CAPTION>
                                                                    September 30,
                                           ----------------------------------------------------------------
                                            2004          2003          2002          2001            2000
                                             ----         ----          ----          ----            ----


                                                                (Dollars in thousands)

<S>                                        <C>           <C>           <C>           <C>             <C>
Non-accrual mortgage loans:
  Delinquent less than 90 days             $  ---        $  209        $  ---        $   87          $  ---
  Delinquent 90 days or more                2,949         1,609         1,237         2,139           2,031
                                            -----         -----         -----         -----           -----
     Total                                  2,949         1,818         1,237         2,226           2,031
                                            -----         -----         -----         -----           -----
Non-accrual other loans:
  Delinquent less than 90 days                ---           ---           ---           176             50
  Delinquent 90 days or more                   83           397           423           183             230
                                            -----         -----         -----         -----           -----
     Total                                     83           397           423           359             735
                                            -----         -----         -----         -----           -----
Total non-accrual loans                     3,032         2,215         1,660         2,585           2,766
Accruing loans 90 days or more delinquent     ---           ---           ---           ---             ---
                                            -----         -----         -----         -----           -----
  Total nonperforming loans                 3,032         2,215         1,660         2,585           2,766
                                            -----         -----         -----         -----           -----
Other nonperforming assets:
  Real estate owned                            48           906           733           917             871
     Less allowance for losses                 --           ---           ---           ---             ---
                                            -----         -----         -----         -----           -----
     Total                                     48           906           733           917             871
                                            -----         -----         -----         -----           -----

Total nonperforming assets, net            $3,080        $3,121        $2,393        $3,502          $3,637
                                            =====         =====         =====         =====           =====

Nonperforming loans to total net loans       0.16%         0.14%         0.11%         0.18%           0.22%

Total nonperforming assets to total assets   0.12%         0.13%         0.11%         0.20%           0.23%
</TABLE>

                               ------------------

       For the year ended September 30, 2004, interest income of $146,000 would
have been recorded on loans accounted for on a non-accrual basis if the loans
had been current throughout the period. No interest income was actually included
in net income regarding non-accrual loans during the same period.

       After foreclosure, management periodically performs valuations and the
real estate is carried at the lower of carrying amount or fair value less cost
to sell. Revenue and expenses from operations and changes in the valuation
allowance are included in income from real estate operations on the consolidated
statement of earnings.

       Net gains on the sale of real estate owned were $290,000, $78,000, and
$35,000 for the years ended September 30, 2004, 2003 and 2002, respectively.

       Classified Assets. Under OTS regulations, problem assets of insured
institutions are classified as either "substandard," "doubtful" or "loss." An
asset is considered "substandard" if the current net worth and paying capacity
of the obligor and/or the value of the collateral pledged are no longer adequate
to support the loan. "Substandard" assets are characterized by the "distinct
possibility" that the insured institution will sustain "some loss" if the
deficiencies are not corrected. Assets classified as "doubtful" have all of the
weaknesses inherent in those classified "substandard," with the added
characteristic that the weaknesses present make "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable and improbable." Assets classified "loss" are those considered
"uncollectible" and of such little value that the continuance as assets without
the establishment of a specific loss reserve is not warranted. In addition to
the classification of assets as "substandard," "doubtful" or "loss," the OTS
regulations also require that assets that do not currently expose the Company to
a sufficient degree of risk to warrant one of the three foregoing
classifications but which do possess credit deficiencies or potential weaknesses
deserving management's close attention must be designated "special mention."

       When an insured institution classifies problem assets as either
substandard or doubtful, it is required to establish specific allowances for
loan losses in an amount considered appropriate by management. See "--Allowance
for Loan Losses" below. Additionally, the institution establishes general
allowances to recognize the inherent risk associated with

                                       13
<PAGE>
lending  activities,  but  which,  unlike  specific  allowances,  have  not been
allocated to particular problem assets. When an insured  institution  classifies
problem  assets as  "loss,"  it is  required  either  to  establish  a  specific
allowance  for losses equal to 100% of the amount of the asset so  classified or
to  charge  off  such  amount.   An   institution's   determination  as  to  the
classification  of its  assets  and the amount of its  valuation  allowances  is
subject to review by the OTS,  which can order the  establishment  of additional
general or specific loss allowances.

       The following table presents the Company's classified assets at the dates
indicated.

                                                     September 30,
                                      -----------------------------------------

                                       2004              2003            2002
                                       ----              ----            ----
                                                    (In thousands)

     Substandard:
       Real Estate Owned              $   48           $  906           $  733
       Loans                           4,644            6,449            6,348
                                       -----            -----            -----
         Total Substandard             4,692            7,355            7,081
     Doubtful                            ---              140              203
     Loss                                ---              ---              ---
                                       -----            -----            -----

                                      $4,692           $7,495           $7,284
                                       =====            =====            =====

                               ------------------

Allowance for Loan Losses

       Provisions for loan losses are charged to operations to establish an
allowance for loan losses; recognized loan losses (recoveries) are then charged
(credited) to the allowance. The Company evaluates the outstanding loan
portfolio with respect to the adequacy of the allowance for loan losses at least
quarterly.

       Management's policy is to provide for estimated losses on the Company's
loan portfolio based on management's evaluation of the probable losses (existing
and inherent). Such evaluations are made for all major loans on which full
collectibility of interest and/or principal may not be reasonably assured. The
factors that the Company considers are the estimated value of the underlying
collateral, the management of the borrower, and current operating results,
trends and cash flow. In addition to analyzing individual loans, management also
analyzes on a regular basis its asset classification and recent loss experience
on other loans to help insure that prudent general allowances are maintained on
one-to-four family loans, automobile loans and home equity loans. Management
periodically evaluates the allowance percentages utilized for general allowance
purposes based upon delinquency, charge off, underwriting, and other trends.

       The Company segregates the loan portfolio for loan loss purposes into the
following broad segments: commercial real estate, residential real estate,
commercial business and consumer loans. The Company provides for a general
allowance for losses inherent in the portfolio by these categories, which
consists of two components: (1) General loss percentages are calculated based
upon historical analyses. (2) A supplemental portion of the allowance is
calculated for inherent losses which probably exist as of the evaluation date
even though they might not have been identified by the more objective processes
used for the portion of the allowance described above. This is due to the risk
of error and/or inherent imprecision in the process. This portion of the
allowance is particularly subjective and requires judgments based on qualitative
factors which do not lend themselves to exact mathematical calculations such as:
trends in delinquencies and nonaccruals; migration trends in the portfolio;
trends in volume, terms, and portfolio mix; new credit products and/or changes
in the geographic distribution of those products; changes in lending policies
and procedures; loan review reports on the efficacy of the risk identification
process; changes in the outlook for local, regional and national economic
conditions; concentrations of credit; and peer group comparisons.

       Specific allowances are provided in the event that the specific
collateral analysis on each classified loan indicates that the probable loss
upon liquidation of collateral would be in excess of the general percentage
allocation. The provision for loan losses is debited or credited in order to
state the allowance for loan losses to the required level as determined above.


                                       14
<PAGE>

       The Company considers a loan to be impaired when it is probable that the
Company will be unable to collect all amounts due, both principal and interest,
according to the contractual terms of the loan agreement. When a loan is
impaired, the Company may measure impairment based on (a) the present value of
the expected future cash flows of the impaired loan discounted at the loan's
original effective interest rate, (b) the observable market price of the
impaired loan, or (c) the fair value of the collateral of a collateral-dependent
loan. The Company selects the measurement method on a loan-by-loan basis, except
collateral-dependent loans for which foreclosure is probable, must be measured
at the fair value of the collateral. In a troubled debt restructuring involving
a restructured loan, the Company measures impairment by discounting the total
expected future cash flows at the loan's original effective rate of interest.

       The following tables set forth an analysis of the Company's allowance for
loan losses at the dates indicated.
<TABLE>
<CAPTION>
                                                                    Years ended September 30,
                                       --------------------------------------------------------------------------------

                                              2004             2003           2002             2001            2000
                                              ----             ----           ----             ----            ----
                                                                     (Dollars in thousands)

<S>                                        <C>              <C>            <C>              <C>             <C>
Balance at beginning of year               $ 16,199         $ 14,377       $ 13,417         $ 12,729        $ 11,952
    Provision for losses                      1,652            1,946          1,515              798             847
Charge offs:
    Residential                                 (12)             (50)           (15)             (20)            (75)
    Commercial real estate                      ---              ---            (87)             ---             (30)
    Consumer                                    (75)            (169)          (266)            (231)           (125)
    Other                                       ---              ---           (299)            (102)             (3)
                                             ------           ------         ------           ------          ------
       Total charge offs                        (87)            (219)          (667)            (353)           (233)



Recoveries:
    Residential                                  16               14             49               25              40
    Commercial real estate                      ---                2              2              ---              39
    Consumer                                     22               75             56               21              70
    Other                                       ---                4              5              197              14
                                             ------           ------         ------           ------          ------
       Total recoveries                          38               95            112              243             163

Balance at end of year                     $ 17,802         $ 16,199       $ 14,377         $ 13,417       $  12,729
                                             ======           ======         ======           ======          ======


Allowance for loan losses to total
    net loans                                   .94%            1.01%           .93%             .96%           1.02%

Allowance for loan losses to  total
    nonperforming loans                      587.20%          731.34%        865.87%          519.01%         460.19%

Allowance for loan losses and
    allowance for REO to total
    nonperforming assets                     578.13%          519.10%        600.72%          383.09%         350.02%

Net charge offs to average loans
    outstanding during the period              0.00%            0.01%          0.04%            0.01%           0.01%
Classified loans to total net loans            0.25%            0.41%          0.43%            0.38%           0.37%
</TABLE>


                                       15
<PAGE>

       The following table presents an allocation of the entire allowance for
loan losses among various loan classifications and sets forth the percentage of
loans in each category to total loans. The allowance shown in the table should
not be interpreted as an indication that charge offs in future periods will
occur in these amounts or proportions or that the analysis indicates future
charge off trends.
<TABLE>
<CAPTION>
                                                                    September 30,
                      -------------------------------------------------------------------------------------------------------------

                              2004               2003                   2002                   2001                 2000
                              ----               ----                   ----                   ----                 ----
                              % of Loans            % of Loans             % of Loans             % of Loans             % of Loans
                                in Each              in Each                in Each                 in Each              in Each
                              Category to           Category to            Category to            Category to           Category to
                      Amount  Total Loans   Amount Total Loans    Amount  Total Loans    Amount  Total Loans   Amount  Total Loans
                      ------  -----------   ------ -----------    ------  -----------    ------  -----------   ------  -----------

                                                                 (Dollars in thousands)

<S>                  <C>        <C>        <C>         <C>        <C>         <C>        <C>        <C>        <C>         <C>
Allowance at end of
  period applicable
  to:
Residential          $ 2,880     64.87%    $ 2,957      68.43%    $ 3,160      73.33%    $ 3,177     75.48%    $ 2,820      74.69%
Commercial real
  estate               9,567     21.87       8,152      18.66       6,884      15.15       5,931     13.45       6,192      14.51
Consumer               3,433      9.83       3,238       9.71       3,056       9.46       2,786      8.95       2,432       8.67

Commercial business    1,922      3.43       1,852       3.20       1,277       2.06       1,523      2.12       1,285       2.13
                      ------    ------      ------     ------      ------     ------      ------    ------      ------     ------
    Total            $17,802    100.00%    $16,199     100.00%    $14,377     100.00%    $13,417    100.00%    $12,729     100.00%
                      ======    ======      ======     ======      ======     ======      ======    ======      ======     ======
</TABLE>
                               ------------------

Investment Activities

       The Company invests primarily in overnight funds, U.S. Government and
agency obligations, and Federal Home Loan Bank capital stock. The Company does
not invest in derivatives, collateralized mortgage obligations or other hedging
instruments.

       The table below summarizes the carrying value and estimated market value
of the Company's portfolio of investment securities at the dates indicated.
<TABLE>
<CAPTION>

                                                                   September 30,
                              ----------------------------------------------------------------------------------

                                           2004                         2003                       2002
                                           ----                         ----                       ----
                                                                  (In thousands)


                                  Carrying         Market      Carrying         Market    Carrying        Market
                                    value          value         value          value       value         value
                                    -----          -----         -----          -----       -----         -----
<S>                               <C>            <C>           <C>            <C>         <C>           <C>
  Available for sale:
    FHLB notes                    $ 79,869       $ 79,869      $171,882       $171,882    $ 91,639      $ 91,639
    FFCB note                       20,014         20,014        10,338         10,338         ---           ---
    FHLMC notes                        ---            ---           ---            ---      51,132        51,132
    Equity securities                   25             25         3,968          3,968       4,434         4,434
                                   -------        -------       -------        -------     -------       -------
        Total                     $129,760       $129,760      $246,519       $246,519    $147,205      $147,205
                                   =======        =======       =======        =======     =======       =======


  Held to maturity:
    FHLB notes                         ---            ---        30,000         30,128         ---           ---
    FHLMC notes                        ---            ---        19,975         20,141         ---           ---
    Municipal securities               440            477           441            484         200           245
                                   -------        -------       -------        -------      ------       -------
        Total                     $    440       $    477      $ 50,416       $ 50,753    $    200      $    245
                                   =======        =======       =======        =======      ======       =======

  FHLB stock                      $ 29,175       $ 29,175      $ 25,525       $ 25,525    $ 22,276      $ 22,276
</TABLE>

                                       16
<PAGE>
      The table below presents the contractual maturities and weighted average
yields of investment securities at September 30, 2004 excluding FHLB stock and
equity securities. Yields on tax-exempt obligations are not reported on a tax
equivalent basis.
<TABLE>
<CAPTION>

                     One Year or Less       One to Five Years       More Than Five Years            Total Investment Securities
                     ----------------       -----------------       --------------------            ---------------------------

                                                                  (Dollars in thousands)

                                                                                          Average
                               Weighted               Weighted                Weighted   remaining                        Weighted
                   Amortized   average    Amortized    average    Amortized   average    years to    Amortized   Market    average
                     cost       yield       cost        yield       cost       yield     maturity      cost       value     yield
                     ----       -----       ----        -----       ----       -----     --------      ----       -----     -----


<S>                 <C>        <C>      <C>            <C>        <C>          <C>         <C>      <C>        <C>          <C>
  FHLB Notes        $20,101    1.91%    $ 60,026       2.60%      $  ---        ---%       2.0      $ 80,127   $ 79,869     2.43
  FNMA Notes            ---     ---       30,018       2.43          ---        ---        2.0        30,018     29,852     2.43
  FFCB Notes         10,074    1.62       10,000       1.90          ---        ---        1.4        20,074     20,014     1.76
  Municipal
     Securities         155    2.12           85       2.60          200       7.40        3.4           440        477     4.61

</TABLE>
                               ------------------

The Company's investment strategy has been to shift the portfolio from lower
yielding, shorter- term investment securities into higher yielding balloon
mortgage-backed securities, with expected average lives in the three to four
year range. These securities will provide future monthly principal and interest
repayment cash flow to fund loan growth or other investment alternatives.

Sources of Funds

     Deposits. The Company offers a number of different deposit accounts,
including regular savings, interest-bearing checking or NOW accounts,
non-interest checking, money market accounts, term certificate accounts and
individual retirement accounts.

     The Company has thirty-five full-service banking offices in addition to its
home office in Fort Pierce. The Company's strategy has been to have conveniently
located offices in growth markets as one of its main methods of attracting
funds. The Company's deposits are obtained primarily from areas surrounding its
offices. Certificate accounts in excess of $100,000 are not actively solicited
nor are brokers used to obtain deposits.

     The Company offers internet banking services that allows customers the
ability to access their accounts through any computer terminal that has internet
browser capabilities, using secure technology. Customers benefit by having
access to their accounts and being able to initiate transactions at the time
that suits them best. The Company also offers a bill pay service.

      Management believes that demand and passbook accounts are less sensitive
to changes in interest rates than other types of accounts, such as certificate
accounts. As of September 30, 2004, the Company had 50.73% of its deposits in
passbook and demand accounts, 48.35% in certificate accounts and .92% in
official checks. When management determines the levels of its deposit rates,
consideration is given to local competition, U.S. Treasury securities offerings,
and anticipated funding requirements.


                                       17
<PAGE>
     The following table sets forth the distribution of the Company's deposit
accounts at the dates indicated and the weighted average interest rates on each
category of deposits presented. Management does not believe that the use of
year-end balances instead of average monthly balances produces any material
difference in the information presented:

<TABLE>
<CAPTION>

                                                                           September 30,
                                --------------------------------------------------------------------------------------------------
                                            2004                               2003                               2002
                                           -----                              -----                               ----
                                                     Weighted                          Weighted                            Weighted
                                                     Average                            Average                             Average
                                                     Nominal                            Nominal                             Nominal
                               Amount      Percent    Rate        Amount     Percent      Rate        Amount     Percent      Rate
                               ------      -----      ----        ------     -------      ----        ------     -------      ----

                                                                      (Dollars in thousands)
<S>                       <C>             <C>      <C>          <C>         <C>        <C>         <C>         <C>        <C>
Demand accounts:
  Non-interest
    Bearing demand        $  315,588      18.08%         N/A    $  245,665      15.85%       N/A   $  158,599      11.55%       N/A
  NOW accounts               138,126       7.92          .11%      115,054       7.42        .10%      97,150       7.08        .30%
  Money market accounts
                             263,592      15.11         1.20       213,961      13.80       1.00      166,004      12.09       1.44
                           ---------  ---------    ---------     --------- ----------  ---------    ---------  ---------  ---------

  Subtotal                   717,306      41.11          .46       574,680      37.07        .39      421,753      30.72        .64
Savings accounts:
  Passbook                   167,848       9.62          .27       140,432       9.06        .27      115,306       8.40        .52

Certificate accounts         843,623      48.35         2.55       815,727      52.62       2.60      814,127      59.30       3.74

Official checks               16,053        .92          N/A        19,421       1.25        N/A       21,697       1.58        N/A
                           ---------  ---------    ---------     ---------  ---------  ---------    ---------  ---------  ---------
  Total deposits          $1,744,830     100.00%        1.45%   $1,550,260     100.00%     1.54%   $1,372,883     100.00%      2.46%
                           =========  =========    =========     =========  =========  =========    =========  =========  =========

</TABLE>
                                 -----------------

    The following table sets forth the Company's certificate accounts classified
by rates as of the dates indicated.


                                                   September 30,
                                 -----------------------------------------------

                                   2004                2003               2002
                                   ----                ----               ----

                                              (Dollars in thousands)

         0.00 - 2.00%           $ 208,245           $ 230,216         $  58,297
         2.01 - 3.00%             431,839             357,715           169,064
         3.01 - 4.00%             117,229             134,985           318,683
         4.01 - 5.00%              65,830              69,737           122,280
         5.01 - 6.00%              15,150              17,614            56,015
         6.01 - 7.00%               5,330               5,460            87,692
         7.01 - 8.00%                 ---                 ---             2,096
                                  -------             -------           -------
Total certificate accounts      $ 843,623           $ 815,727         $ 814,127
                                  =======             =======           =======

                                       18
<PAGE>
    At September 30, 2004, the Company had certificate accounts in amounts of
$100,000 or more maturing as follows:


                Maturity Period                                  Amount
                ---------------                                  ------
                                                             (In thousands)
                3 Months or Less                               $  33,854
                Over 3 to 6 Months                                31,711
                Over 6 to 12 Months                               59,410
                Over 12 Months                                    69,666
                                                                 -------
                Total                                          $ 194,641
                                                                 =======

    The following table contains information regarding deposit account activity
for the periods shown.

<TABLE>
<CAPTION>
                                                                       Years ended September 30,
                                                       -----------------------------------------------------
                                                            2004                 2003                2002
                                                            ----                 ----                ----
                                                                        (Dollars in thousands)

<S>                                                       <C>                 <C>                 <C>
   Net increase before interest credited                  $ 174,300           $ 154,208           $ 140,568
   Interest credited                                         20,270              23,169              31,794
                                                           --------            --------            --------
   Deposit account increase                               $ 194,570           $ 177,377           $ 172,362
                                                           ========            ========            ========


   Weighted average cost of deposits during the year           1.43%               1.88%               2.93%

   Weighted average cost of deposits at end of year            1.45%               1.54%               2.46%
</TABLE>
                               -----------------

      Borrowings. The Bank is a member of the FHLB. The FHLB offers various
fixed rate and variable rate advances to its members. The FHLB underwrites each
advance request based on factors such as adequacy and stability of capital
position, quality and composition of assets, liquidity management, level of
borrowings from all sources and other such factors. Pursuant to a collateral
agreement with the FHLB, all advances are secured by stock in the FHLB and a
blanket floating lien that requires the Company to maintain qualifying first
mortgage loans as pledged collateral in an amount equal to, when discounted at
80% of the unpaid principal balances, the advances.

      As of September 30, 2004, the Company had $553.5 million of outstanding
FHLB advances. Of this amount, $540.5 million have maturity dates of fifteen
months or longer. The remaining $13 million of FHLB advances are short-term,
with maturity dates of twelve months or less. Of the $540.5 million long-term
FHLB advances, the FHLB could call $90 million on specified dates in 2005, $75
million on specified dates in 2006, $160 million on specified dates in 2007, $50
million on specified dates in 2008 and $75 million on specified dates in 2009.

      As of September 30, 2004, the Company had a total credit limit of $656.8
million and an availability limit of $103.3 million with the FHLB.

      In addition to FHLB advances, the Company had $403.3 million of unpledged
mortgage-backed securities at September 30, 2004. These unpledged
mortgage-backed securities could be used as collateral under reverse repurchase
transactions with various security dealers. Such borrowing transactions could
provide additional cash and liquidity to the Company in the event of sudden or
unforeseen deposit withdrawals.

                                       19

<PAGE>
      The following table sets forth information regarding the Company's
borrowing at and for the periods indicated:

<TABLE>
<CAPTION>

                                                                               At or for the year ended September 30,

                                                                                   2004          2003          2002
                                                                                   ----          ----          ----
                                                                                         (Dollars in thousands)
<S>                                                                              <C>          <C>           <C>
       FHLB Advances:
             Average balance                                                     $ 535,382    $ 457,300     $ 352,199
             Maximum balance at any month-end                                      553,502      510,512       445,528
             Balance at year end                                                   553,492      503,511       445,528
             Weighted average interest rate during the year                          4.42%         4.89%         5.34%
             Weighted average interest rate at year end                              4.35%         4.50%         4.97%
       Other Borrowings:
             Average balance                                                     $     875     $    591     $      20
             Maximum balance at any month-end                                          850          900            43
             Balance at year end                                                       785          855           ---
             Weighted average interest rate during the year                           5.79%        5.96%        13.82%
             Weighted average interest rate at year end                               6.00%        6.00%          .00%
       Total Borrowings:
             Average balance                                                     $ 536,257    $ 457,891     $ 352,219
             Maximum balance at any month-end                                      554,322      511,373       445,528
             Balance at year end                                                   554,277      504,366       445,528
             Weighted average interest rate during the year                           4.42%        4.89%         5.34%
             Weighted average interest rate at year end                               4.35%        4.50%         4.97%
</TABLE>

                               ------------------

Subsidiaries

      Federal associations generally may invest up to 2% of their assets in the
capital stock, obligations or other securities of service corporations plus an
additional 1% of assets for community inner city or community development
purposes. In addition, federal associations such as the Bank may invest in the
aggregate up to 50% of their total regulatory capital in primarily loans to
service corporations and lower tier entities. Further, federal associations are
permitted to invest an unlimited amount in operating subsidiaries engaged solely
in activities that a federal association may engage in directly.

     The Company has four active  service  corporation  subsidiaries.  Appraisal
Analysts, Inc. provides real estate appraisal services to the Company as well as
third  parties.  Harbor  Insurance  Agency,  Inc.  specializes  in property  and
casualty  insurance  and  provides a full  range of  insurance  products  to its
customers.  (See Note 17 to Consolidated  Financial Statements on page 60 in the
Annual Report).  Harbor Florida  Financial  Services,  Inc.  offers  non-deposit
investment   products  for  sale  through  the  Bank's  branch  offices.  H.  F.
Development  Company,  Inc.  serves as a  repository  for some of the  Company's
commercial REO  properties  held for  disposition.  See "Business -- Delinquent,
Nonperforming and Classified Assets".

Competition

      The Company faces strong competition both in attracting deposits and in
originating loans. Its most direct competition for deposits has come
historically from commercial banks, brokerage houses, other savings associations
and credit unions in its market area. The Company expects continued strong
competition from such financial institutions in the foreseeable future. The
Company's market area includes branches of a number of commercial banks that are
substantially larger than the Company in terms of statewide deposits. The
Company competes for deposits by offering depositors a high level of personal
service, convenient locations and competitive interest rates.


                                       20
<PAGE>


      The competition for loans comes principally from commercial banks,
mortgage banking companies and other savings associations. Lending competition
has increased substantially in recent years as a result of the large number of
institutions seeking to benefit from the growth in the Company's market area.
The Company competes for loans primarily through the interest rates and loan
fees it charges, the types of loans it offers, and the efficiency and quality of
services it provides borrowers, real estate brokers and builders. Factors that
affect competition include general and local economic conditions, current
interest rate levels and volatility of the mortgage markets. Based on total
assets, as of September 30, 2004, the Company was the largest savings
institution headquartered in the seven county area served by the Company.

Employees

      At September 30, 2004, the Company had a total of 587 full-time and 81
part-time employees, none of whom were represented by a collective bargaining
unit. The Company considers its relations with its employees to be good.


Available Information

      The Company's website address is www.harborfederal.com. The Company makes
available, free of charge, on or through its website, its annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, and beneficial ownership reports on Forms 3, 4,
and 5 as soon as reasonably practicable after electronically filing such
material with, or furnishing it to, the Securities and Exchange Commission. The
information found on the Company's website is not incorporated by reference in
this or any other report the Company files or furnishes to the Securities and
Exchange Commission.

Item 2.  Properties

      The Company conducts its business from its headquarters in Fort Pierce and
through 35 full-service banking offices, and five insurance agency locations.
These offices are located in Brevard, Indian River, Martin, Okeechobee, St.
Lucie, Lake and Volusia counties, Florida. The net book value at September 30,
2004 of the Company's offices was $29.6 million. The following table sets forth
information regarding the Company's offices.

<TABLE>
<CAPTION>

                                          Year                                            Lease
         Location                        Opened             Owned/Leased             Expiration Date
         --------                        ------             ------------             ---------------

ST. LUCIE COUNTY
----------------

<S>                                       <C>                  <C>
Downtown Fort Pierce                      1934                 Owned
100 South Second Street
Fort Pierce, FL 34950

Virginia Avenue                           1968                 Owned
500 Virginia Avenue
Fort Pierce, FL 34982

Prima Vista                               1975                 Owned
7181 South U.S. Highway 1
Port St. Lucie, FL 34952

Midport Road                              1981                 Owned
2400 S.E. Midport Road, Suite 100
Port St. Lucie, FL 34952

Lakewood Park                             1981                 Owned
5100 Turnpike Feeder Road
Fort Pierce, FL 34951

</TABLE>

                                       21
<PAGE>
<TABLE>
<CAPTION>
                                          Year                                            Lease
         Location                        Opened             Owned/Leased             Expiration Date
         --------                        ------             ------------             ---------------
<S>                                       <C>                  <C>                       <C>
Orange Blossom Mall                       1984                 Owned
4156 Okeechobee Road
Fort Pierce, FL 34947

Darwin Square                             1991                 Owned
3201 S.W. Port St. Lucie Boulevard
Port St. Lucie, FL 34953

St. Lucie West                            1993                 Owned
1320 S.W. St. Lucie West Boulevard
Port St. Lucie, FL 34986

Harbor Insurance Agency, Inc.             2000                 Leased                    01/14/06
2222 Colonial Road, Suite 100
Fort Pierce, FL 34950

Harbor Insurance Agency, Inc.             2003                 Owned
2400 S.E. Midport Road, Suite 110
Port St. Lucie, FL 34952

St. James                                 2003                 Owned
5493 N.W. St. James Drive
Port St. Lucie, FL 34983

INDIAN RIVER
------------

Miracle Mile                              1973                 Owned
655 21st Street
Vero Beach, FL 32960

Sebastian                                 1979                 Owned
13397 U.S. Highway #1
Sebastian, FL 32958

Causeway                                  1981                 Owned
1700 A1A
Vero Beach, FL 32963

Indian River Mall                         1997                 Owned
6080 20th Street
Vero Beach, FL 32966

West Sebastian                            1998                 Owned
993 Sebastian Boulevard
Sebastian, FL 32958

Harbor Insurance Agency, Inc.             2001                 Owned
6078 20th Street
Vero Beach, FL 32966
</TABLE>

                                       22
<PAGE>
<TABLE>
<CAPTION>

                                          Year                                            Lease
         Location                        Opened             Owned/Leased             Expiration Date
         --------                        ------             ------------             ---------------

<S>                                       <C>                  <C>                       <C>
Oslo Road                                 2004                 Owned
4105 9th Street S.W.
Vero Beach, FL 32968

MARTIN COUNTY
-------------

Palm City                                 1978                 Owned
1251 S.W. 27th Street
Palm City, FL 34990

East Ocean                                1981                 Owned
1500 E. Ocean Boulevard
Stuart, FL 34996

Downtown Stuart                           1996                 Leased                    08/14/05
789 S. Federal Highway
Stuart, FL 34994

Jensen Beach                              1999                 Leased                    05/31/05
3639 N.W. Federal Highway
Jensen Beach, FL 34957

Harbor Insurance Agency, Inc.             2004                 Owned
1251 S.W. 27th Street, Suite 4
Palm City, FL 34990

BREVARD COUNTY
--------------

Palm Bay                                  1981                 Owned
5295 Babcock Street, N.E.
Palm Bay, FL 32905

Indialantic                               1981                 Owned
305 5th Avenue
Indialantic, FL 32903

West Melbourne                            1982                 Owned
2950 W. New Haven Avenue
West Melbourne, FL 32904

Baytree/Viera                             1995                 Owned
100 Capron Trail
Melbourne, FL 32940

Palm Bay West                             2001                 Owned
122 Malabar Road, S.W.
Palm Bay, FL 32907

Rockledge                                 2001                 Owned
630 Barnes Boulevard
Rockledge, FL 32955
</TABLE>


                                       23
<PAGE>
<TABLE>
<CAPTION>

                                          Year                                            Lease
         Location                        Opened             Owned/Leased             Expiration Date
         --------                        ------             ------------             ---------------

<S>                                       <C>                  <C>                       <C>
Cocoa Commons                             2002                 Owned
2323 Highway 524
Cocoa, FL 32926

Merritt Island                            2004                 Owned
1840 N. Courtenay Parkway
Merritt Island, FL 32953

Harbor Insurance Agency, Inc.             2004                 Leased                    1/19/07
5270 Babcock Street N.E., Suite 7
Palm Bay, FL 32905

OKEECHOBEE COUNTY
-----------------

Okeechobee                                1980                 Owned
2801 Highway #441 South
Okeechobee, FL 34974

VOLUSIA COUNTY
--------------

Port Orange                               1983                 Owned
4035 S. Nova Road
Port Orange, FL 32127

Ormond Beach                              1984                 Owned
75 N. Nova Road
Ormond Beach, FL 32174

New Smyrna Beach                          1988                 Owned
2230 State Road #44
New Smyrna Beach, FL 32168

Deltona                                   1998                 Owned
2901 Howland Boulevard
Deltona, FL 32725

Deland                                    1999                 Owned
312 N. Woodland Boulevard
Deland, FL 32720

Ormond by the Sea                         1999                 Owned
1190 Ocean Shore Boulevard
Ormond Beach, FL 32176

Orange City                               2002                 Owned
884 Saxon Boulevard
Orange City, FL 32763
</TABLE>

                                       24
<PAGE>

LAKE COUNTY
-----------
<TABLE>
<CAPTION>
                                          Year                                            Lease
         Location                        Opened             Owned/Leased             Expiration Date
         --------                        ------             ------------             ---------------

<S>                                       <C>                  <C>                      <C>
Citrus Tower                              2004                 Leased                   11/19/23 (1)
210 Citrus Tower Boulevard
Clermont, FL 34711

(1) Land lease
</TABLE>

                               ------------------

      Subject to business decisions which may occur from time to time on
selected leases, leases are anticipated to renew upon their expiration.

      The Company uses a data processing service located in Milwaukee, Wisconsin
for record keeping activities. The data processor specializes in servicing
financial institutions. The Company's current contract expires in 2009. All data
processing equipment that is used internally by the Company is owned by the
Company. The net book value of such data processing equipment and related
software as of September 30, 2004 was $3,596,000.

Item 3.  Legal Proceedings

      There are various claims and lawsuits in which the Company is periodically
involved incident to the Company's business. In the opinion of management, no
material loss is anticipated from any such pending claims or lawsuits.

Item 4.  Submission of Matters to a Vote of Security Holders

      None.

                                     PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters
           and Issuer Purchases of Equity Securities

      The Company's common stock trades on the NASDAQ National Market under the
symbol HARB. The approximate number of shareholders of record and beneficial
shareholders of the common stock at December 3, 2004 was 9,922, some of which
are street name holders.

      The Company declared $0.6400 in cash dividends per share for the twelve
months ended in fiscal 2004. Dividend payments were $0.1450 in the first quarter
and $0.1600 in the second, third and fourth quarters. The Company currently
expects that comparable cash dividends will continue to be paid in the future.
However, the declaration of dividends by the Board of Directors (if any) will
depend upon a number of factors, including but not limited to, the health and
financial condition of the Company, capital requirements, regulatory
limitations, results of operations and the general requirements of Delaware
state law.

      On December 3, 2004, the closing sales price of the Company's common stock
was $36.00 per share. The following table sets forth the market price range of
the high and low closing sales price and cash dividends paid per share of common
stock as reported by the NASDAQ stock market for the four quarters of fiscal
years 2004 and 2003.
                                       25
<PAGE>

                                            Low         High         Dividends
                                            ---         ----         ---------
FISCAL 2004
   First Quarter................          $26.53       $30.88         $.1450
   Second Quarter ..............           27.51        31.25          .1600
   Third Quarter................           26.47        29.23          .1600
   Fourth Quarter...............           27.09        32.93          .1600
FISCAL 2003
   First Quarter................          $19.06       $23.14         $.1125
   Second Quarter ..............           22.46        24.77          .1300
   Third Quarter................           23.51        27.25          .1300
   Fourth Quarter...............           23.97        27.76          .1450

      Information concerning securities authorized for issuance under the
Company's equity compensation plans is set forth in "Item 12. Security Ownership
of Certain Beneficial Owners and Management - (d) Equity Compensation Plan
Information," and is incorporated herein by reference.

      The following table sets forth the Company's treasury stock purchases for
the quarter ended September 30, 2004:
<TABLE>
<CAPTION>

                                                   Total number of shares purchased as     Maximum number of shares
              Total number of        Average      part of the stock repurchase plan       that may yet be purchased
              shares purchased        price        extended on October 13, 2004              under the plan
              ----------------        -----        ----------------------------              --------------
<S>                 <C>               <C>                    <C>                                <C>
 July                  ---               N/A                    ---                             687,323
 August                ---               N/A                    ---                             687,323
 September          10,025            $32.58                 10,025                             677,298
</TABLE>

Item 6.  Selected Financial Data

      The information contained in the table captioned "Selected Consolidated
Financial Data" in the Annual Report on pages 18 through 19 is incorporated
herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

      The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 19 through 32 in the Annual Report is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

      The information contained in the sections captioned "Disclosure on
Quantitative and Qualitative Market Risk and Asset and Liability Management",
"Interest Rate Sensitivity" and "Interest Rate Risk" is contained on pages 21
through 24 in the Annual Report and is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

      The Company's consolidated financial statements listed in Item 15 herein,
together with the report thereon by KPMG LLP, are found in the Annual Report on
pages 33 through 64 and is incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

      None.

Item 9A. Controls and Procedures

Based on their evaluation, the Company's Chief Executive Officer, Michael J.
Brown, Sr. and Chief Financial Officer, H. Michael Callahan, have concluded the
Company's disclosure controls and procedures are effective as of

                                       26
<PAGE>

September 30, 2004 to ensure that information required to be disclosed in the
reports that the Company files or submits under the  Securities  Exchange Act of
1934 is recorded,  processed,  summarized  and reported  within the time periods
specified in the  Securities  and Exchange  Commission's  rules and forms and is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal executive and principal  financial  officers,  as appropriate to allow
timely decisions regarding required disclosure.  During the last fiscal quarter,
there have been no changes in the internal control over financial reporting that
has  materially  affected,  or is  reasonably  likely to  materially  affect the
internal control over financial reporting.


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

      The information contained under the sections captioned "Beneficial
Ownership of Common Stock," on pages 2 through 4, "Board Meetings and
Committees" on pages 7 through 10 and "Section 16(A) Beneficial Ownership
Reporting Compliances" on page 18 of the Proxy Statement of Harbor Florida
Bancshares, Inc. (the "Proxy Statement) filed with the SEC on December 15, 2004
is incorporated herein by reference.

      The Company has adopted a code of ethics for financial professionals that
applies to its chief executive officer, chief financial officer and controller.
A copy of the Company's code of ethics is attached as Exhibit 14.1 to this Form
10-K and is also posted on its Internet site at www.harborfederal.com. In the
event that the Company makes any amendment to, or grants any waiver from, a
provision of the code of ethics that applies to the chief executive officer,
chief financial officer or controller and that requires disclosure under
applicable SEC rules, the Company intends to disclose such amendment or waiver
and the reasons therefor on its Internet site. Under the terms of the code of
ethics for financial professionals, the chief executive officer, chief financial
officer and controller are required to report any possible violation of the
code.

Item 11.  Executive Compensation

      The information contained under the sections captioned "Executive
Compensation" on pages 11 through 15 of the Proxy Statement filed with the SEC
on December 15, 2004 is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters

  (a) Security Ownership of Certain Beneficial Owners

      The information required by this item under the sections captioned "Voting
Procedures" on page 2 and "Beneficial Ownership of Common Stock" on pages 2
through 4 of the Proxy Statement filed with the SEC on December 15, 2004 is
incorporated herein by reference.

  (b) Security Ownership of Management

      The information required by this item under the section captioned
"Beneficial Ownership of Common Stock" on pages 2 through 4 of the Proxy
Statement filed with the SEC on December 15, 2004 is incorporated herein by
reference.

  (c) Changes in Control

      Management of the Company knows of no arrangements, including any pledge
by any persons of securities of the Company, the operation of which may, at a
subsequent date, result in a change in control of the Registrant.

                                       27
<PAGE>
  (d) Equity Compensation Plan Information

      The following table provides information about the Company's common stock
that may be issued under the Company's 1994 Incentive Stock Option Plan, 1994
Stock Option Plan for Outside Directors, Directors Deferred Compensation Plan
and 1998 Stock Incentive Plan for Directors, Officers and Employees. The Company
does not have any equity compensation plan that was not approved by
shareholders, except for its employee stock ownership plan and as indicated
below.
<TABLE>
<CAPTION>

                                                                                                 Number of securities remaining
                                    Number of securities to be                                   available for future issuance
                                      issued upon exercise of      Weighted-average exercise    under equity compensation plans
                                       outstanding options,          price of outstanding       (excluding securities reflected
Plan Category                           warrants and rights      options, warrants and rights               in (a))
----------------------------------- ---------------------------- ------------------------------ ---------------------------------
                                                (a)                          (b)                              (c)
<S>                                           <C>                          <C>                              <C>
Equity compensation plans approved by
   shareholders:
   Incentive stock option plans              1,045,406                     $ 12.78                          152,439
   1998 Recognition and Retention
     Plan                                      167,573                         N/A                           38,557
Equity Compensation plans not
   approved by shareholders(1):
   Director's Deferred
     Compensation Plan                         310,586                         N/A                              N/A
</TABLE>

(1) Includes shares to be distributed in accordance with the Directors' Deferred
Compensation Plan. The plan permits directors to elect to defer all or part of
their annual director fees. Under the plan, directors may elect to have their
deferred compensation invested in shares of the Company's common stock. Shares
to be distributed will increase in future years, subject to the elections of
directors under the plan. The plan, which is more fully described in Note 16 to
the Company's Consolidated Financial Statements and originally adopted in 1971,
was most recently amended in 1998 and was not submitted to shareholder vote and,
therefore, not approved by shareholders.

Item 13.  Certain Relationships and Related Transactions

      The information required by this item under the sections captioned "Voting
Procedures" on page 2, "Beneficial Ownership of Common Stock" on pages 2 through
4 and "Certain Transactions" on page 16 through 17 of the Proxy Statement filed
with the SEC on December 15, 2004 is incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services

      The information required by this item under the section captioned
"Independent Auditors" on page 17 and 18 of the Proxy Statement filed with the
SEC on December 15, 2004 is incorporated herein by reference.


                                       28
<PAGE>
                                     PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a)       Documents filed as a part of this Report:

          (1) The Consolidated  Financial Statements of the Registrant as listed
          below (See Exhibit 13) are filed as part of this  document  under Item
          8:
<TABLE>
<CAPTION>

                                                                                        Pages in
                                                                                      Annual Report
                                                                                      -------------

<S>                                                                                         <C>
          Report of Independent Registered Public Accounting Firm                           33

          Consolidated Statements of Financial Condition                                    34

          Consolidated Statements of Earnings                                               35

          Consolidated Statements of Stockholders' Equity and Comprehensive
           Income                                                                           36

          Consolidated Statements of Cash Flows                                             38

          Notes to Consolidated Financial Statements                                        40
</TABLE>

          (2) The Consolidated  Financial  Statement Schedules of the Registrant
              as required to be filed in this  Report are either not  applicable
              or are included elsewhere in this Report.

          (3) Exhibit Index

          The exhibits listed below are included with this Report or are
incorporated herein by reference to an identified document previously filed with
the Securities and Exchange Commission as set forth parenthetically.

 3(i)          *Certificate of Incorporation of Registrant  (Exhibit 3.3 to
               Pre-effective  Amendment No. 1 to the  Registration  Statement on
               Form S-1, No. 333-37275 filed November 10, 1997)

 3(ii)         *Bylaws  of  Registrant   (Exhibit  3.4  to  Pre-Effective
               Amendment  No. 1 to the  Registration  Statement on Form S-1, No.
               333-37275, filed November 10, 1997)

 10(i)         *Employment  contract with Michael J. Brown,  Sr. (Exhibit
               10(a) to the  Registration  Statement on Form S-4 filed  December
               20, 1996)

 10(ii)        *1994  Incentive  Stock Option Plan (Exhibit  10(b) to the
               Registration Statement on Form S-4 filed December 20, 1996)

 10(iii)       *1994 Stock Option Plan for Outside  Directors  (Exhibit
               10(c) to the  Registration  Statement on Form S-4 filed  December
               20, 1996)

 10(iv)        *Harbor  Federal  Savings  Bank  Non-Employee  Directors'
               Retirement  Plan  (Exhibit  10(vi) to Form  10-Q for the  quarter
               ended December 31, 1997 filed August 11, 1997)

 10(v)         *Unfunded Deferred Compensation Plan for Directors (Exhibit
               10(vii) to Form 10-K for the year ended  September 30, 1998 filed
               December 24, 1998)

                                       29
<PAGE>

 10(vi)        *1998 Stock Incentive Plan for Directors,  Officers and
               Employees (Exhibit 4.3 to the Registration  Statement on Form S-8
               filed October 26, 1998)

 10(vii)       *Change of Control  Agreements  (Exhibit  10(vii) to Form
               10-K for the year ended  September  30, 2000 filed  December  29,
               2000)

 10(viii)      *Change of Control  Agreement  (Exhibit 10(viii) to Form
               10-Q for the quarter ended June 30, 2003 filed August 14, 2003)

 10(ix)        *Change of Control Agreement  (Exhibit 10(ix) to Form 10-K
               for the year ended September 30, 2003 filed December 29, 2003)

 10(x)         *Amendment to  employment  contract with Michael J. Brown,
               Sr.  (Exhibit 10(x) to Form 10-K for the year ended September 30,
               2003 filed December 29, 2003)

 10(xi)        *Senior  Officer  Incentive  Plan for  fiscal  year  2004
               (Exhibit  10(xi) to Form 10-K for the year  ended  September  30,
               2003 filed December 29, 2003)

 10(xii)       *Amendments  to Change of  Control  Agreements  (Exhibit
               10(xii) to Form 10-Q for the  quarter  ended June 30,  2004 filed
               August 13, 2004)

 13            **Excerpts from the 2004 Annual Report to  Shareholders  filed
               herewith.   Such  Annual   Report,   except  for  those  portions
               specifically  incorporated by reference,  is furnished to the SEC
               for  information  purposes  only and  should  not be deemed to be
               filed.

 14.1          *Code of  Ethics  (Exhibit  14.1 to Form  10-K for the year
               ended September 30, 2003 filed December 29, 2003)

 21            **Subsidiaries of the Registrant

 31.1          **Certification  by Michael J. Brown,  Sr., Chief Executive
               Officer  pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
               2002.

 31.2          **Certification  by H. Michael  Callahan,  Chief  Financial
               Officer  pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
               2002.

 32.1          **Certification  by Michael J. Brown,  Sr., Chief Executive
               Officer  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2          **Certification  by H. Michael  Callahan,  Chief  Financial
               Officer  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

 99            *Proxy  Statement for the 2004 Annual Meeting of  Shareholders
               filed with the SEC on December 15, 2004.

*Incorporated by reference.
**Included with this report.


                                       30
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                            HARBOR FLORIDA BANCSHARES, INC.
                                                          (Registrant)

Dated: December 13, 2004                    By:              /s/
                                            ---------------------------------
                                            Michael J. Brown, Sr.
                                            President and Chief Executive
                                            Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.


             /s/                                          December 13, 2004
---------------------------------------
Michael J. Brown, Sr.
President, Chief Executive
Officer and Director

             /s/                                          December 13, 2004
---------------------------------------
H. Michael Callahan
Chief Financial Officer

             /s/                                          December 13, 2004
---------------------------------------
Lynn W. Wall
Controller and Chief Accounting Officer

             /s/                                          December 13, 2004
---------------------------------------
Bruce R. Abernethy, Sr., Director

             /s/                                          December 13, 2004
---------------------------------------
Richard N. Bird, Director

             /s/                                          December 13, 2004
---------------------------------------
Edward G. Enns, Director

             /s/                                          December 13, 2004
---------------------------------------
Frank H. Fee, III, Director

             /s/                                          December 13, 2004
---------------------------------------
Richard B. Hellstrom, Director

             /s/                                          December 13, 2004
---------------------------------------
Larry Lee, Jr., Director

             /s/                                          December 13, 2004
---------------------------------------
Richard L. Lynch, Director

             /s/                                          December 13, 2004
---------------------------------------
Dr. Edwin R. Massey, Director

             /s/                                          December 13, 2004
---------------------------------------
Richard V. Neill, Sr., Director

                                       31
<PAGE>


                                                                  EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT


   The Registrant has one wholly-owned subsidiary corporation, the Bank, and the
Bank has eight wholly-owned subsidiary corporations. Each is a Florida
corporation.

1. Appraisal Analysts, Inc.

2. H. F. Development Company, Inc.

3. Indigo Tree, Inc. (inactive)

4. The Palm Bay Inn Corporation (inactive)

5. Highland Communities, Inc. (inactive)

6. CFD, Inc. (inactive)

7. Harbor Insurance Agency, Inc.

8. Harbor Florida Financial Services, Inc.




<PAGE>


                                                               EXHIBIT 31.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Michael J. Brown, Sr., Chief Executive Officer of Harbor Florida Bancshares,
   Inc., certify that:

1.   I have reviewed this report on Form 10-K of Harbor Florida Bancshares,
     Inc.;

2.   Based on my knowledge, this report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary
     to make the statements made, in light of the circumstances under which
     such statements were made, not misleading with respect to the period
     covered by this report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows
     of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
     registrant and have:

     a.   Designed such disclosure controls and procedures,  or caused such
          disclosure  controls  and  procedures  to be  designed  under our
          supervision,  to ensure that material information relating to the
          registrant,  including  its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly during
          the period in which this report is being prepared;

     b.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
          controls  and   procedures  and  presented  in  this  report  our
          conclusions  about the  effectiveness of the disclosure  controls
          and  procedures,  as of the  end of the  period  covered  by this
          report based on such evaluation; and

     c.   Disclosed in this report any change in the registrant's  internal
          control   over   financial   reporting   that   occurred   during
          registrant's most recent fiscal quarter (the registrant's  fourth
          fiscal  quarter  in  the  case  of an  annual  report)  that  has
          materially  affected,  or  is  reasonably  likely  to  materially
          affect,   the   registrant's   internal  control  over  financial
          reporting; and

5.   The registrant's other certifying officer and I have disclosed, based
     on our most recent evaluation of internal control over financial
     reporting, to the registrant's auditors and the audit committee of
     registrant's board of directors (or persons performing the equivalent
     functions):

     a.   All  significant  deficiencies  and  material  weaknesses  in the
          design or operation of internal control over financial  reporting
          which are reasonably  likely to adversely affect the registrant's
          ability  to  record,  process,  summarize  and  report  financial
          information; and

     b.   Any fraud,  whether or not material,  that involves management or
          other employees who have a significant  role in the  registrant's
          internal control over financial reporting.

         /s/
----------------------
Michael J. Brown, Sr.
Chief Executive Officer
December 13, 2004



<PAGE>

                                                                  EXHIBIT 31.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, H. Michael Callahan, Chief Financial Officer of Harbor Florida Bancshares,
   Inc., certify that:

1.   I have reviewed this report on Form 10-K of Harbor Florida Bancshares,
     Inc.;

2.   Based on my knowledge, this report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary
     to make the statements made, in light of the circumstances under which
     such statements were made, not misleading with respect to the period
     covered by this report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows
     of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
     registrant and have:

     a.   Designed such disclosure controls and procedures,  or caused
          such disclosure controls and procedures to be designed under
          our  supervision,   to  ensure  that  material   information
          relating  to  the  registrant,  including  its  consolidated
          subsidiaries,  is made  known to us by others  within  those
          entities,  particularly  during  the  period  in which  this
          report is being prepared;

     b.   Evaluated the  effectiveness of the registrant's  disclosure
          controls  and  procedures  and  presented in this report our
          conclusions   about  the  effectiveness  of  the  disclosure
          controls and procedures, as of the end of the period covered
          by this report based on such evaluation; and

     c.   Disclosed in this report any change in the  registrant's
          internal  control over  financial  reporting  that  occurred
          during   registrant's   most  recent  fiscal   quarter  (the
          registrant's  fourth fiscal quarter in the case of an annual
          report)  that  has  materially  affected,  or is  reasonably
          likely  to  materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based
     on our most recent evaluation of internal control over financial
     reporting, to the registrant's auditors and the audit committee of
     registrant's board of directors (or persons performing the equivalent
     functions):

     a.   All significant  deficiencies and material weaknesses in the
          design or  operation  of  internal  control  over  financial
          reporting  which are reasonably  likely to adversely  affect
          the registrant's ability to record,  process,  summarize and
          report financial information; and

     b.   Any fraud, whether or not material, that involves management
          or  other  employees  who  have a  significant  role  in the
          registrant's internal control over financial reporting.

         /s/
---------------------
H. Michael Callahan
Chief Financial Officer
December 13, 2004



<PAGE>

                                                                 EXHIBIT 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



The following certification accompanies the issuer's Annual Report on Form 10-K
and is not filed, as provided in SEC Release Nos. 33-8238, 34-47986 dated June
5, 2003.

In connection with the Annual Report of Harbor Florida Bancshares, Inc. (the
"Company") on Form 10-K for the period ending September 30, 2004 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Michael J. Brown, Sr., Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934 as amended; and
     (2) The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations of
         the Company.

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.




         /s/
----------------------
Michael J. Brown, Sr.
Chief Executive Officer
December 13, 2004



<PAGE>


                                                                 EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002




The following certification accompanies the issuer's Annual Report on Form 10-K
and is not filed, as provided in SEC Release Nos. 33-8238, 34-47986 dated June
5, 2003.

In connection with the Annual Report of Harbor Florida Bancshares, Inc. (the
"Company") on Form 10-K for the period ending September 30, 2004 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I, H.
Michael Callahan, Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934 as amended; and
     (2) The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations of
         the Company.

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.




         /s/
---------------------
H. Michael Callahan
Chief Financial Officer
December 13, 2004